One of the joys of the new year is the restart of having to pay CPP and EI premiums. It always makes that first pay cheque a bit smaller, and thus that much more annoying. You have just got used to not having to pay them (if you make enough money), and now you are back paying them again, how annoying!

Some folks will pay CPP & EI premiums the whole year, but those who make a bit more, you will eventually hit the max and will stop paying premiums later in the year.

Remember you can have some Fun With Numbers and figure out when you may stop paying these premiums by doing this simple calculation (you’ll need your first pay cheque showing how much you pay each pay cheque):

# Pays = Maximum Premium / Premium per Pay

I do that every year and then mark my calendar to remind myself when I stop paying. On that pay you could take that “extra” money and then pay off debts with it, couldn’t you?

I agree, January can be a killer with renewed CPP and EI deductions. And if you are like me and get paid twice a month, it’s the second 31 day months in a row. Back when I had bi-weekly mortgage payments, it often meant 3 mortgage payments somewhere in there along with Christmas bills.

My company has annual performance bonuses that are handed out in March, which throw a wrench in your formula. As with taxes, a certain percentage is deducted for CPP and UI until the max is paid. If I got a $50,000 bonus (I can dream, can’t I), the remainder of my CPP and UI would be deducted on just that one pay.